Time for reflection, reality check, risk mitigation and lessons learnt action

Friday, 2 December 2011 00:00 -     - {{hitsCtrl.values.hits}}

From early in-house management training to training in world class management schools that professionals, business leaders, academics and civil society leaders have undergone, they have learnt of the key management principle of engaging in quiet reflection, reality checks, risk mitigation assessments and the need to plan lessons learnt response action.

These practices are considered essential after the launch of a new product/service, a major investment/acquisition/disinvestment, key strategic negotiation, major change management strategy implementation, new competitor entry, significant process/systems change and especially after a significant change in the operating business environment.

In the last few months there have been significant issues impacting on businesses due to changes in the operating business environment. So it is incumbent upon leaders of business and professionals to engage in the process described above.

The scope of this review will deal with only seven such important issues, viz;

1.The 2012 Budget proposal to vest in the State 37,000 hectares of unused plantation company lands and distribute them in two-acre, 30-year lease blocks to smallholder families:

  • Will plantation labour of the estates living in estates in line rooms qualify to receive leases to be given to smallholder families?  If so, will they have priority over other smallholder families? Will they be entitled to continued occupation of line rooms and to previously-enjoyed other perks and benefits, if a few member s of the family continue to serve the estate as staff?
  • If plantation labour is given the smallholder leases and is thus unable to serve the estates, who will provide the human resource needs of the estates?
  • If the plantation labour are not given the small holder leases, how will they react, as they now treat the estate as their “homeland”? Will this lead to significant conflict between them and new leaseholders and even with the estate management? Will this move lead to sowing seeds for the emergence of a new “terrorist” group? Where these estate staff is of Indian origin how will India, especially Southern Indian groups, react? Will India and Southern Indian groups support the emergence of a new breed of “terrorists” and even support them to destabilise peace and security locally?
  • Where such identified lands are within the estates and not on its perimeter,                       what management challenges will arise in respect of security and safety of crops, assets and staff of the estates?
  • How and who will be responsible for providing smallholders with road way network connections, electricity, water, sanitation, health, education and other services?
  • Will estates be required to compulsorily purchase small holder crops and how will estate management ensure that such harvests are from the smallholder plots?

2. Lack of transparency and focused strategies in the Budget 2012 in managing the foreign debt:

  • The Budget does not clearly describe the planned strategies to manage the ballooning foreign debt, including short term commercial debt and even the long term debt for infrastructure development secured on commercial interest terms.
  • The Budget fails to provide adequate transparency and strategies demonstrating debt servicing capability based on free cash flow returns from the infrastructure projects.
  • The Budget fails to provide adequate transparency and strategies in promoting public private partnerships in respect of future infrastructure investments as well as projects already invested in to by the Government.
  • The Budget fails to provide adequate transparency and strategies demonstrating how any planned debt equity swaps will be developed, structured and managed, despite a Senior Minister announcing that negotiations have begun with the Chinese lenders of the Norochcholai project? If such strategies are in place what international relations issues will arise, if the debt equity swaps involve strategic ports, airports and other sensitive projects, especially where Indo Lanka and China Sri Lanka relations are likely to be impacted?
  • The Budget does not clearly describe the planned strategies to manage the liquidity needs in the event of a significant sell out by foreign bond holders, especially now that the exchange rate is to be allowed to float to its market linked equilibrium.
  • The Budget fails to provide adequate transparency, scenario plans and contingency plans in debt management, especially if key variables change and thus leaves no assurance these pivotal risks have been stress tested.
  • The Budget fails to provide adequate transparency on the fiscal gap of Sri Lanka at the end 2011 and in each of the three subsequent years.

3.The enactment of the Expropriation Law as an Urgent Bill and its consequences and precedence:

  • The precedence set with this bill being enacted by the legislator with specific institutions being listed in schedules without adequate and transparent justification and validation that such inclusions guarantee that the said institutions fall within the ambit of the legislative framework?
  • If any wrongful scheduling has taken place of institutions and assets not covered by the scope of the enactment, what remedial measures should be in place?
  • Whether an agreed transparent and well defined framework/scope must be prior agreed before any new bills are to be classified as Urgent Bills along with the processes, time commitments and communication mechanism which must be adopted in such instances?
  • Should the professionals advocate for Constitutional provisions to bring back the ‘Judicial Review’ processes available in pre-1972 Constitutions?
  • What risk mitigation steps are available to negate any adverse PR and image in the eyes of local and foreign investors?
  • Are there any lessons for chambers and professional groups to adopt in future handling of similar issues?

4.Commonwealth Games bid financing and commitment to continue with the Hambantota Sports City complex:

  • Should there be a transparent post audit of the CWG bid process and determination of lessons learnt for future action? Should this audit specifically address the cost justification, the scope/objectives and core value commitments that drove the bid process, the composition of the leadership team and their competences, whether there were adequate safeguards in place to assure transparency/economy/efficiency/effectiveness of project management and discharge due accountability to stakeholders?
  • What international relations linked lessons and guidelines should be embedded in future events, especially if future bids are lost, in order to assure that key officials refrain from making allegations against the winning bidder and its officials?
  • With the good governance commitments and conflicts of interest guidelines in place, how should key regulators like the Central Bank and its key officials behave in seeking donor support from regulated institutions?  Should they not refrain from making any pressure-oriented demands from their controlled institutions?
  • Within the framework of significant spend disclosure commitments as per accounting standards, corporate governance commitments to stakeholders, Inland Revenue expectations  and the provisions of Companies Donations Act, will all private sector donors and State institutions declare their donations and promotional spends for the CWG bid and their justify such spends in the annual accounts to be next published?
  • Should the Bankers Association have challenged a charge purported to have been made that ‘banks allegedly “rip-off” both the depositor and the borrower’ http://www.thesundayleader.lk/2011/10/30/quid-pro-quo/
  • Professionals should debate the justification of the total cost of the CWG bid, including any gratis air tickets, air time, advertisements and senior officials time and overheads in relation to the CWG bid vs the possible alternate use of such funds for Corporate Social Responsibility spends, which could have provided for the people of northern conflict-affected areas much-needed housing, water/sanitation and electricity, education, livelihood supportive skills enhancements and start up finances, health facilities(including specialised cancer, trauma treatment and rehabilitation hospital complexes)
  • Will the Hambantota Sports City Complex plan be invested into despite the loss of the CWG bid as announced by VVIPs and how will it be financed in the context that the Budget 2012 does not make any references or financial provision for it?

5.Sri Lanka Medical Council being declared a Public Enterprise:

  • How does the Gazette notice issued declaring the Sri Lanka Medical Council as a Public Enterprise, despite it being established by the Medical Ordinance of 1927 by Parliament for the integral purpose of the regulation and monitoring of the entire medical profession of the country, impact on the existing legal framework and democratic governance expectations of professionals?
  • Will this set a precedence for the Government to declare all independent professional and research institutions and even business groups/associations as public enterprises, stating that they are underperforming institutions that have received government grants, land grants, tax incentives and have now failed to live up to its stated purpose and national objectives?
  • If this practice is extensively used by the Government, which independent institutions are safe from Government interference and control? Is this the beginning of the end of independent institutions?

6.Proposed Merger of Public Enterprises:

  • Learning lessons from the experiences with the recently-enacted Expropriation Bill, where the Government used a statement in the 2011 Budget speech to justify its actions and treat as due public notice of its future intentions, business leaders and professionals should examine any hidden meanings, business risks and potentially-damaging strategies that may be included within sections 95 and 98 of the Budget speech under the heading ‘Public Enterprises’!
  • Will the Government use the investment portfolio of the EPF and ETF to gain control of private institutions, including private commercial banks, private insurance companies and other manufacturing, services, agricultural and trading entities of the private sector, to become potential partners for expansion, restructure and business mergers with other State owned enterprises, especially those entities that have previously been State entities and were privatised!?

7.Having in place market needs-oriented capability developed talent pool of human resources:

  • Have the business leaders and professionals reviewed the Trilingual National Plan and Sri Lanka Qualifications framework to satisfy whether an adequate talent pool of human resources required for the future will be facilitated via these and the curriculum and teaching methodology in secondary and tertiary educational and training institutions?
  • Will these policies in addition develop the ideal capabilities of citizens in the nation at large to satisfy the communications and exercise of democratic governance and rule of law, justice, sustainability needs and networking needs specifically with tourists, visitors, communities, segments within ethnic/cultural/religious and social diversity of Sri Lanka?
  • Whether any segment of society, be it an ethnic, rural, socially underprivileged and/or those with lesser equitable access to adequate national infrastructure will as a consequence of these policy implementations be further marginalised?
  • Will the planned Sri Lanka Qualification Framework be consistent and with private sector and professionally run educational and professional establishments already in place and planned alliances with foreign universities and educational establishments to be implemented in the future?
  • Will the planned inclusion of English Competency testing at Grade 5 Scholarship examination limit and marginalise rural high IQ potential new talent?
  • Will the type of basic communications capability and skills of English and Tamil/Sinhalese needed for basic level transactions in business sales/purchases, services and networking with locals, tourists and expatriates on a day-to-day basis by a largest possible proportion of citizens across the entire country be satisfied by the proposed national language policy framework?
  • How will the planned language policy and qualifications framework empower a larger segment of high productive, higher quality conscious, get it right first time committed segment of workforce to be skilled and empowered in the appropriate cognitive skills areas ?
  • Will the language policy and qualifications framework as proposed place any hurdles or create barriers and challenges in the face of potentially high IQ young and youth from rural, under privileged societies with inequitable access to optimum national educations infrastructure from entering the future talent pool?
  • Will the planned structure and methodology of the Sri Lanka Qualifications framework deter in any way the development of adequate numbers of high IQ, ICT empowered youth with managerial, research and development, design, innovation and creativity, visioning and planning, and leadership skills from entering the national talent pool?

It is indeed time for reflection, reality check, risk mitigation and lessons learnt action by professionals, business leaders, academics and civil society leaders.

Man is distinguished from the beast primarily by his capacity for self-knowledge. Both people and animals eat, sleep and reproduce. Both experience sensations, emotions and perceptions; and both are capable of gathering information about the external world. But only man is truly capable of knowing himself. This fact was clearly recognised by the great Western philosopher Socrates, who took as the cornerstone of his philosophy the maxim ‘Know Thyself’.

Zen Buddhism concurs in this recognition of self-knowledge as the distinguishing mark of authentic human existence. Self Reflection in Zen Buddhism, http://www.urbandharma.org/ibmc/ibmc2/zpzp7.html.

(The writer is a former Chairman of the Ceylon Chamber of Commerce.)

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